Richard Harrington: Q 46 Thank you, Mrs Gillan, and welcome to the Chair. It is very nice to see you. I will ask just a brief question to give plenty of people a chance.
Thank you for coming today, gentlemen, and helping us. As you probably know, the evidence you are giving today is the beginning of the Committee stage of the Bill. May I ask you both to comment on the interop—I can’t pronounce it—on how the Data Communications Company system will help the SMETS 1 meters to be operable throughout the whole system? We keep hearing about it and my shadow and I have discussed it at different times, but I would be very interested in your comments.

Derek Lickorish: When they all go in initially, of course they are not in dumb mode. The percentages vary. I am told that at some stages 20% or more of them are being operated in dumb mode. That occurs for a variety of reasons—for commercial and technical reasons. The way in which the market is evolving is that meter asset providers—MAPs, as they are known—fund these assets that are going on the wall and they will also fund SMETS 2 assets. All the time, there is uncertainty about how long these assets are going to endure and whether the market going to endure. When are SMETS 2 meters going to be ready?
There is an issue called deemed rentals that occurs. What does that mean? It means that if the acquiring supplier does not have the same sort of contract that is with the asset coming in, it gets asked to pay a very high deemed rental, which it will not pay because it renders the customer unprofitable. That means that it faces two choices: putting the meter into dumb mode, or going out and taking out that meter, even if it is the same meter, and putting in one of its own, funded by another meter asset provider.
There is quite a complex set of issues, which only we in this room and others—interested observers—understand to any degree. There is the deemed rental issue and then there is the technical issue, as we have heard. I do not criticise anyone, because everyone is breaking their back to get this programme running. Everyone is working hard, so I do not decry what anyone is doing, but the way it is set up—and it is driven by political milestones—is going to cause perverse behaviour from time to time. I will come back to that.

Stephen Kerr: Q  We have 7 million of these SMETS 1 meters on walls, 20% of which you estimated are now in dumb mode. Many of these meters will be unplugged. If people have changed supplier, they have probably unplugged it because it is are not providing any functional service to the consumer anymore. How do we update the SMETS 1 meters to make them SMETS 2 compatible?

Derek Lickorish: You can update them. This is a very detailed discussion and I am happy to talk to you separately about it. This term “unplugged” means that they may not be looking at the IHD. The system is still connected and has not been unplugged. If a secure meter that has gone dumb, we can still talk to it, so it is not an issue.

Mark Pawsey: May I move on to a bit of the Bill that we have yet to cover in our deliberations, the special administration regime? The Government say that the risk of the DCC failing is very low, but none the less want to put in this special administration regime. In what circumstances could you envisage the DCC failing, and do you agree that the likelihood of that happening is, as the Government say, very lowQ ?

Richard Wiles: Likewise, I am not able answer as to the exact reasons, but bringing previous Acts together under one is a sound idea. With regards to how DCC would reach that situation, again, I have no absolute definition as to how that could happen now.

Derek Lickorish: It has been worked out for me—it says so here—that the additional resources to meet 2020 need to increase from where they are today by 283%. They need to be ready now to start running to meet 2020. I do not think that is possible because these need to be highly trained people. This is not a straightforward job for an electrician; it is more complicated than that. Before I come to resources, the current productivity rate of the teams working out there is less than half what was originally thought. You have to take that into consideration; it is not factored into my 283% increase.
As for manufacturing, subject to clarity about the SMETS 1 end date, because the supply chain is already winding down for that now, if clarity could be given on that, it would ensure that that manufacturing stream is kept running.
On manufacturing capacity for SMETS 2, once you have resolved the interoperability, once you have SMDA approval, once you have tested all these devices at scale, with DCC, it must be about 12 months. Anything less would have the potential to lock in problems for the future because of the model we have chosen. It is a difficult one to answer, but if we satisfy that, there is no reason why manufacturing capacity will not be available.

Dhara Vyas: From the Citizens Advice point of view, we are quite keen to see that transition happen as soon and as rapidly as possible. As I am sure you are aware, SMETS 1 meters do not really provide the same sort of functionality as SMETS 2 meters, and a big part of that is the continuing benefits of SMETS 2 meters. You have heard about the interoperability and the ability to switch, but there is also the kind of loss of functionality in terms of the dynamic currency conversion-enabled services, or DCC-enabled services, that they have access to, and things like “last gasp, first breath”, whereby a network could see if somebody is off supply and act really quickly. SMETS 1 meters do not have that sort of capability built in. So things that really serve to protect consumers are built in to SMETS 2 in a way that they are not with SMETS 1.
Also, there is quite a key area around confusion as the roll-out progresses at a pace and as suppliers and SEGB are working to promote the roll-out and encourage consumers to take up the offer of a smart meter. With different meters going on the wall, consumers are already confused and will ask questions, such as, “My neighbour can do this, and they switched, and they kept their meter. How come I can’t?” So the increased confusion around having more SMETS 1 meters on the wall will cause a problem.

Alan Whitehead: Q  My point is that it is indeed a slice of the period—3.8 over the six months prior to November 2018—and yet in order to reach the roll-out target, the suggestion is that about 14 to 15 million ought to be installed over that same period. It seems to be rather a large gap.

Dr Richard Fitton: I agree with Sarah, the UK is very strong on smart meters. If you speak to anyone in Europe, a lot of them are envious of the technical standards of the smart meters that are being rolled out. As we have heard from all the sessions, it is a very complicated issue and it is not getting any less complicated, certainly for the consumer.
Our research group’’ angle is everything from the consumer side of the meter. We are looking at how to diagnose problems with buildings using the data and systems that are available. We are also developing appliances that will work with smart meters. A big piece of the puzzle that is missing from some of the discussions is the fact that the consumer should be able to engage with the smart meters. As it stands now, they cannot engage with the smart meters. We can log on to the energy supplier’s portal and get a half-hourly reading. But a magic black box called the consumer access device is the gateway to the occupiers having access to their real-time data. This is not a box on the wall that tells them how much energy is costing. It is a consumer access device that streams real-time data to things such as smart appliances and smart heating systems for homes.
That is the whole aim, as far as I can see, of the smart and flexible grid that we constantly talk about. To attach one of these devices is exceptionally difficult and I have never had one successfully connected personally, nor have colleagues or associates. So a big piece of the puzzle is missing in using this data for something that is really smart, rather than just for billing. Billing is clearly important, but the use of the best-value data for the consumer appears to be the missing part of the puzzle. I think that would also push some buttons to help develop the interest in smart meters and get them into people’s homes.

Dr Richard Fitton: The consumer needs a route to how they can access their real time data from the home area network. That needs a procedure to be put in place because that is the keystone.

Dr Sarah Darby: That would be an argument for paying special attention to such areas and thinking how that could be addressed. It does seem to me that the strength of the programme so far is that it is voluntary, and that the early learning is being done by people who are already well-disposed to it and will perhaps put up with any kind of teething glitches that go on. They will adapt and then, if they are satisfied, will pass the word on to others so that others will want a smart meter too.
If we speed up, the amount of attention paid to the installation process will almost inevitably drop off. There will be pressure on installers just to go into a building, put the kit in and get out, and not to spend time doing the things that customers have said they appreciate about the roll-out so far: having someone who will explain stuff to them and show them how to use the equipment, and having that level of support to the installation. If we lose that through speeding up the whole process, the programme would suffer greatly in the long run.